AMID BUYER PRESSURE, TINY HOUSING BUBBLE MAY BE FORMING HERE

It quite probably is, but it’s still a great time to buy a home. In a market that is unusually prone to boom and bust, we are very early in the process, judging by market fundamentals.

Indeed, our latest bubble is minuscule compared to the global bank-wrecker that triggered the Great Recession. Yet it’s still worth taking seriously. The questions now are how big it will get, when it will eventually pop, and what — if anything — you should do about it.

For families who dream of buying a home for the long run, bubble risk should be way down on the list of considerations. Except for last year, now is the best time to buy since 1997. Mortgages rates are near historic lows, but rising, while prices are climbing fast from their lowest levels in a decade.

Still, investors and speculators should be wary, and do plenty of homework. Buying a home is vastly easier than making money on a rental house or timing the market.

The best evidence for a nascent bubble in San Diego County is behavioral: Buyers are showing signs of growing impatience. As detailed in a slew of stories by Lily Leung, the U-T’s housing reporter, homebuyers returning to the market over the past two years have encountered tight inventories and stiff competition from investors.

Meanwhile, prices have rebounded strongly. The value of the overall market was 12 percent higher in March than a year earlier, according to the S&P/Case-Shiller Home Price Index, which is the gold standard because it tracks recurring sales of the same homes.

DataQuick figures show the median price rising a scorching 21.4 percent in April, with price inflation accelerating over the past year. The homes were flying off the shelves: In March, there were 3,762 sales and only about 4,200 active listings, yielding a sales velocity that’s probably a record high.

Coupled with fears that mortgage rates will rise, this has buyers in a tizzy. In scenes reminiscent of pre-crash 2005, they are joining waiting lists for new construction, writing offers on the hoods of cars, and sending “love letters” to persuade sellers to pick them.

The sense of urgency is increasing along with prices. It’s the classic sign of early bubble formation.

“In a normal market, higher prices mean that sellers sell less. But the market becomes pathological when higher prices cause more buying,” said Ed Leamer, an economist at the UCLA Anderson Forecast who in 2003 warned of the last bubble. “People are starting to think, ‘I’ve got to buy a house before it is too late.’ That’s a bubble.”